Board effectiveness tied to ‘cultural forces’ at nonprofits

The success of nonprofit boards, whose role has changed dramatically and become increasingly critical to the success of their organizations, depends on

“cultural forces” on the board and at the nonprofit, a new white paper says.

Those culture forces include capable leadership, a sound organizational structure, attention to fiduciary duties, and a culture that binds board members to one another in a cohesive unit, says the white paper from Commonfund Institute.

“How well a board functions determines, in large measure, the fortunes of the organization it governs,” the paper says. “Mediocre or middling performance may enable an organization to survive, but rarely to thrive, while weak or dysfunctional boards may jeopardize their organization’s very existence.”

Strategy, not tactics

The paper, “Strive for the Best: Building and Maintaining an Excellent Board,” says a board’s role is strategic, not tactical, and that its main task is oversight, or reviewing and assessing management’s success in carrying out its job.

The board should engage in active supervision of management and staff, it says, setting standards that are clear and objective, making sure job descriptions are known and understood, and seeing that senior staff members do a good job supervising the organization’s actual operations.

Because of its fiduciary responsibilities, a board must protect it’s nonprofit’s mission and protect against drifting from that mission in ways its charter does not permit, says the paper, which was written by John S. Griswold, executive director of Commonfund Institute, and William F. Jarvis, managing director.

Purpose and direction

In defining the mission and monitoring progress, the paper says, the board must provide purpose and direction to the staff, while in its oversight duties it needs to stay focused on governance and avoid getting involved in operations.

The paper says policies must be in place so that in case of conflicts of interest — with board members’ own interests, or with the interests of another organization with which board members are involved — the conflict will be disclosed and neutralized.

The structure of a board can help or hurt its effectiveness and is key to improving its performance, the paper says, and smaller boards generally are believed to function more effectively.

Picking board chair, executive director

Selection of the board chair is the single most crucial factor in a board’s success, and board orientation is the crucial first step, the paper says. A particularly useful practice, it says, is to assign an existing board member to serve as mentor to an incoming member.

And arguably the most critical task for the board, it says, is to select, hire, support, evaluate and, if needed, replace the president or executive director.

“Only a high level of board performance can create and sustain the energizing, inspiring and motivating environment in which the organization and its constituencies can excel,” the paper says.

The biggest impact on improving a board, it says, may be rooted in “cultural forces inside the board and organization.”

The most important of those forces is “trust among the board members, the chair and the senior staff,” it says.

Beneficial outcomes of that trust, it says, include “elimination of functional silos and narrow mindsets that can result in turf battles or in refusal to become involved outside the well-defined limits of a particular committee function,” it says.

Trust, recruiting, metrics

The “climate of trust must be created from the top,” it says, “with the board chair serving as the role model and this behavior as the template for committee chairs and committee members.”

Recruitment also is critical for creating a board that can excel, the paper says.

“Effective board members need not be heroic leaders or deep visionary thinkers,” it says, “but they must be thoughtful and authentic individuals who can inspire by example and motivate others in a non-threatening way.”

Also essential for successful boards is creating a “measurement system for the board that is comprehensible, relatively simple and not susceptible to manipulation,” the paper says.

Boards need “reasonably objective methods of assessing their own accomplishments, recognizing areas for improvement and development appropriate action plans,” it says.

So a board should try on a regular basis to “obtain a comparatively objective set of measurements by which it can judge its success against the goals it has set for the organization and itself,” it says.

‘Cultural attributes’

“Excellent boards are built on a clear understanding of their duties as fiduciary and governing bodies” of nonprofits, the paper says.

With that foundation, it says, a board “is positioned for maximum effectiveness when it can benefit from strong leadership by the chair, a properly structured committee system, engaged and committed board members and a sound relationship with senior staff members,” particularly the president or executive director.

“Cultural attributes such as leadership, trust, transparency and candor,” the paper says, “are an essential adhesive that binds the board together and constitutes the indispensable ingredient in the formulate for success.”

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